What Have We Learned About Institutional Change?

institutional changeA number of noteworthy reports on institutional change, development, and foreign aid have been published recently. There is much agreement between them, suggesting that we have reached a tipping point in knowledge in this area. I will briefly summarize the results here and provide links for those who want to explore the subject further. Continue reading

Are the g7+ and Donors Heading for a Clash?

g7+ donors foreign aidThe g7+ group of 18 fragile and conflict-affected states has joined together to share experiences and promote a new development framework in what are the most difficult of circumstances. Supported by the International Dialogue on Peacebuilding and Statebuilding, the group achieved a major breakthrough at the Busan High Level Forum on Aid Effectiveness in November 2011—an agreement on a New Deal for Engagement in Fragile States. A major part of this is a new orientation to the relationship with donors.

The New Deal priorities what fragile states themselves think are the most important issues to building peaceful and prosperous societies by identifying five Peacebuilding and Statebuilding Goals (PSGs):

  1. Legitimate politics – Foster inclusive political settlements and conflict resolution
  2. Security – Establish and strengthen people’s security
  3. Justice – Address injustices and increase people’s access to justice
  4. Economic foundations – Generate employment and improve livelihoods
  5. Revenues and services – Manage revenue and build capacity for accountable and fair service delivery

These are meant to frame a country-led, inclusive way of setting national goals and establishing a national development plan. This, in turn, is meant to increase country-donor harmonization and donor co-ordination. Continue reading

Can Foreign Aid Improve Pakistan ’s Political Economy?

Pakistan Political Economy Foreign AidLike many struggling countries, Pakistan’s two most critical problems are feckless leaders and a feeble state. Can donors do anything to help get such countries’ political economy moving in the right direction?

I recently convened a working group of leading Pakistani development professionals and outside experts at the Global Economic Symposium (GES) to discuss just such this question. Continue reading

What Does it Mean to Work Politically in Development?

Adrian Leftwich gives a great description of what it means to work politically in the development field in a recent publication Politics, Leadership, and Coalitions in Development for the Developmental Leadership Program:

There is understandable caution and reserve about the idea of ‘working politically’, or for donors trying to address ‘the political dimensions of development’ – and for good reason. The phrase itself is easily misinterpreted as insensitive interference, as an invasion of sovereignty and a disregard for principles of ownership and endogenously driven developmental processes. It may sound like ‘regime change’. Given those many cases of bullying or intervention by conditionality of the international community in developing countries, there is good reason for such caution, as the very idea of working politically might seem to suggest a flagrant violation of the principles of Accra and Paris. Continue reading

Do World Bank Country Classifications Hurt the Poor?

world bank country classifications

As the competition for president of the World Bank approaches its final stages, it is worth considering what changes ought to be brought in by the new person. One area in need of reform is the Bank’s system of country classifications. Although Robert Zoellick pushed the World Bank to open its much-prized treasure chest of data to the public during his five-year term as president, he did little to reform how the World Bank conceptualized that data. Changing how countries are classified would have a wide impact on the whole development community.

For instance, look at all the discussion in development policy circles about the sharp reduction in the number of low-income countries in recent years. Some believe this news should be trumpeted as a policy success. For others, the reduction suggests that there is a “New Bottom Billion” of poor people living in middle-income countries, forcing a change in donor focus. For yet another group, it indicates that foreign aid as a concept should be updated to blend more loans with grant money.

But has all that much changed? Does the World Bank country classifications accurately identify the countries in need of outside assistance? Continue reading

Horizontal Versus Vertical Social Cohesion: Why the Differences Matter

Social cohesion is an underappreciated but crucial element in development, state building, and poverty reduction.

It is an especially important factor in determining whether a state is fragile or not. As I argued in Fixing Fragile States:

Two factors above all others decide how a country’s political, economic, and societal life evolves: a population’s capacity to cooperate (which depends, for the most part, on the level of social cohesion) and its ability to take advantage of a set of shared, productive institutions (especially informal institutions at the crucial early stages of development when formal institutions are usually feeble and ineffectual). . . . These two ingredients shape how a government interacts with its citizens; how officials, politicians, and businesspeople behave; and how effective foreign efforts to upgrade governance will be. Together with the set of policies adopted by the government, they make up the three major determinants of a country’s capacity to advance.

Fragile states are deficient in both these areas. And the combination of political identity fragmentation and weak national institutions works in a vicious cycle that severely undermines the legitimacy of the state, leading to political orders that are highly unstable and hard to reform.

But social cohesion has rarely attracted the attention it deserves from the development community. Dependent on sociopolitical factors that are hard to measure, analyze, and understand, it holds no prominent place in any international agency’s programming. Like almost everything related to the “software” of how states work, it is all too easily ignored.

This may be changing at least at the margins—in conferences and reports. The World Bank, for instance, is using it to discuss jobs in its forthcoming World Development Report. And the OECD recently published Perspectives on Global Development 2012: Social Cohesion in a Shifting World.

This is progress of a sort, but these conferences and reports are missing something important. Instead of seeing social cohesion as a “complex cultural, psychological and social phenomenon,” as Duncan Green put it on his blog earlier this year, they look at economic issues and technocratic solutions. The OECD report, for instance, promotes redistribution via progressive tax reform and increased and more pro-poor public spending; investment in education; protecting poor people against volatility via social protection and improved labor market institutions such as the minimum wage.

There is nothing particularly wrong with most of this agenda, but it does not get to the heart of the matter. A country with high levels of social cohesion would likely have a leadership with an interest in introducing programs that helped the poor. A country that had little social cohesion would likely have a leadership that had little interest in helping the poor. These proposals matter far less than trying to figure out what affects elite attitudes and what might be done to make elites feel that the poor is “one of us.” Continue reading

Brookings: How Not to Evaluate Aid Effectiveness

There have been growing demands for greater independent evaluation of foreign aid for at least half a decade now. As William Easterly argued as far back as 2006:

We need independent evaluation of foreign aid. It’s amazing that we’ve gone a half century without this. . . . [Truly independent evaluation of aid would] give feedback to see which interventions are working and give incentives to aid staff to find things that work.

The Center for Global Development summarized the need in its report When Will We Ever Learn? Improving Lives Through Impact Evaluation:

Impact evaluations do not have to be conducted in-house. Indeed, their integrity, credibility, and quality is enhanced if they are external and independent.

It is with this understanding that I read the recent Brookings report on aid to fragile states. Continue reading